A Diagrammatic Exposition of Regression and Instrumental Variables for the Beginning Student

Abstract

Some beginning students of statistics and econometrics have difficulty with traditional algebraic approaches to explaining regression and related techniques. For these students, a simple and intuitive diagrammatic introduction as advocated by Kennedy (2008) may prove a useful framework to support further study. The author presents a series of diagrams following Kennedy (2008) that are designed for use in an introductory econometrics course as an intuitive aid when first introducing fundamental concepts of the field. These diagrams are easily used in the classroom as an enhancement to traditional teaching methods. Pedagogical suggestions and a few applied examples drawing on the diagrammatic framework are provided and discussed.

Keywords:

• Ballentine
• econometrics
• pedagogy
• statistics
• Venn diagram